The 30-share BSE barometer rallied 1,410.99 points or 4.94 per cent to settle at 29,946.77. It surged over 1,564 points during the session.
Similarly, the NSE Nifty finished 323.60 points, or 3.89 per cent, up at 8,641.45.
IndusInd Bank was the top gainer in the Sensex pack, rallying up to 46 per cent. Other winners were Bharti Airtel, L&T, Bajaj Finance, Kotak Mahindra, Bajaj Auto, HUL and HDFC -- rising up to 10 per cent.
On the other hand, Maruti Suzuki, Tech Mahindra, Sun Pharma and Reliance Industries closed with losses.
In an effort to cushion the economic blow of the 21-day lockdown in wake of the Covid-19 pandemic, Finance Minister Sitharaman announced a slew of measures to help citizens survive the crisis.
The Rs 1.70 lakh crore economic package involves free food grains and cooking gas to poor for the next three months, one-time doles to women and poor senior citizens, higher wages to workers and measures to boost liquidity of employees.
The scheme will be implemented with immediate effect.
"This is a package for lockdown impacted segments," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, adding that the government is prioritising.
"Industry-specific measures are likely to be announced in the next package. This can go a long way in implementing the lockdown," he said.
According to traders, volatility remained during the day as March derivatives contracts expired.
The Indian rupee appreciated 57 paise to 75.37 against the US dollar in intra-day trade. Meanwhile, bourses in Shanghai, Hong Kong, Tokyo and Seoul ended significantly lower. Benchmarks in Europe were also trading in the red.
International oil benchmark, Brent crude futures fell 2.15 per cent to USD 26.80 per barrel.
The number of COVID-19 cases climbed to 649 in India and the death toll rose to 13, with one death reported each from Gujarat, Tamil Nadu and Madhya Pradesh, according to the Health Ministry.